The Week That Was
The White House Pulls Out the Trade Hammer
Just a few days after Trump tweeted his exasperation with China over North Korea, the White House pulled out the trade sledgehammer. The U.S. Trade Representative will investigate China under Section 301 of the Trade Act of 1974 over its alleged practice of forcing technology transfers in exchange for market access. The decision is a bit out of the norm, considering the World Trade Organization's dispute settlement mechanism is the more common avenue for countries to file such cases and the United States is still required by law to work through WTO channels to settle the case. But the United States has pulled the Section 301 card successfully before, against Japan in the 1980s, and the Trump administration is hoping for a repeat of that success.
Still, the move got Beijing’s attention. On Aug. 5, The United Nations Security Council unanimously agreed to adopt fresh sanctions against North Korea, further banning exports and limiting investment in the country with the goal of slashing import revenue by a third. Neither China nor Russia wielded their veto power to harpoon the measures. This is the culmination of nearly a month of talks between the U.S. and China, with Beijing keeping Moscow very much in the loop. These talks bore fruit, with Washington obtaining enough of a Chinese commitment on meatier sanctions against North Korea to move forward with a U.N. Security Council vote. Of course, China still has limits on how far it’s willing to go to destabilize North Korea, and Russia can also come in to assist with helping to sustain the North Korean regime.
Mixing National Security and Trade
These are busy days for the WTO. Qatar filed complaints at the World Trade Organization against Saudi Arabia, the United Arab Emirates and Bahrain for their economic isolation campaign against it. This will be an important case to watch. The United States is already considering using national security to argue its trade challenges, but Gulf Cooperation Council countries might beat Washington to the punch. GCC countries could respond to Qatar's WTO complaints by claiming their moves are justified since Qatar is harming their national security. That could set an important precedent within WTO disputes for countries seeking ways to wiggle around trade agreements.
Europe Provides Moscow a Silver Lining on Sanctions
U.S. President Donald Trump handcuffed himself to Congress this week when he begrudgingly signed a Congressional sanctions bill that limits his executive authority in dealing with Russia. Moscow reciprocated by booting out 750 U.S. diplomatic staff members and by seizing two U.S. diplomatic compounds. The Europeans are meanwhile building a case against Washington for what they see as U.S. overreach on secondary sanctions (now codified into U.S. law) that could target European firms involved in energy projects with Russia. Even though Russia is not happy that Trump is following through with the sanctions, the EU-U.S. spat presents an opportunity for Moscow to cozy closer to the Continental bloc and exploit the EU-U.S. rift. We'll be watching an upcoming meeting between Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State Rex Tillerson on the sidelines of an Association of Southeast Asian Nations summit in the Philippines on Aug. 6-8 to how this fitful negotiation progresses.
Brazil's Corruption Merry-Go-Round
Brazilian President Michel Temer scraped up enough congressional support to fight off an impeachment trial this week. He's safe for now (and can use this time to proceed with pending reforms), but Brazil's outgoing general prosecutor, Rodrigo Janot, is already preparing more corruption charges against Temer to be unveiled by mid-September
Coalition Building in Mexico
A lawmaker from Mexico's ruling Institutional Revolutionary Party (PRI) proposed legislation to make building governing coalitions easier. Coalition governments would help overcome some of the gridlock inherent in Mexico's fragmented congressional politics. However, a coalition government that enabled Cabinet posts to be doled out to opposition parties would also enable these parties to influence presidential actions. This could be particularly important for PRI after 2018 if populist candidate Andres Manuel Lopez Obrador makes it to the presidency. Still, there may not actually be time or consensus to discuss, amend, and pass legislation to facilitate coalitions between now and the end of the current administration in December 2018.
Saudi Arabia Steps on Iran's Toes in Iraq
Shiite leader Muqtada al-Sadr made a very showy visit to Saudi Arabia on July 30 that yielded a number of agreements with Saudi Crown Prince Mohammed bin Salman to expand Iraqi-Saudi cooperation. The potential for a Saudi consulate in the Shiite-majority city of Najaf and the promise of increased Saudi aid for Iraq confirmed a trend we've been tracking: The region's main Sunni powers are building up resistance against Iran. This means that Iran will be all the more motivated to keep its nuclear deal in place and its relationship with Washington contained while it focuses on this building proxy war.
Rumbles Out of the Niger Delta
Tough talk out of the Niger Delta this week could lead to an uptick in militant attacks. The Pan Niger Delta Forum, an umbrella organization of regional stakeholders better known by its acronym PANDEF issued an ultimatum to the Nigerian government July 31 stating that it would pull out of peace talks if Nigeria didn't demonstrate its seriousness. The ultimatum was retracted on Aug. 3 after Abuja granted the Niger Delta some key concessions, reportedly including plans to legalize makeshift refineries. Still, various Niger Delta militant groups have threatened to return to attacking oil and natural gas infrastructure, underscoring PANDEF's limited control over the many groups operating in the region.
Quote of the Week
"I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk."
—U.S. President Donald Trump on Twitter on July 29, shortly after North Korea tested its second intercontinental ballistic missile.
Violence was rampant in the aftermath of Kenya's presidential election in 2007. That year, the opposition's anger merged with entrenched ethnic conflicts to leave over 1,000 people dead, hundreds of thousands displaced and the regional economy in tatters. Now as the East African powerhouse approaches its next presidential election on Aug. 8, Kenyan President Uhuru Kenyatta and his challenger, Raila Odinga, are jockeying for the public's support. And the question on the minds of many is whether the country can prevent a repeat of the bloodshed it saw a decade ago.
As the newest administration in Washington hammers out a strategy for the war in Afghanistan, a rift has opened among U.S. policymakers about how to proceed. On one side is the Pentagon, which has proposed sending up to 3,900 troops to the conflict-ridden country. If approved, the move would escalate the United States' involvement in the war, which began over 15 years ago. On the other side of the debate is the White House, where reports have emerged of calls to draw down the U.S. troop presence in Afghanistan. War fatigue, spurred by an unwillingness to wade deeper into a feud whose resolution eluded the administrations of Presidents George W. Bush and Barack Obama, is clearly setting in.
The following is an internal Stratfor document listing significant meetings and events planned for the next week. Stratfor analysts use this to stay informed of the activities and travel of world leaders and to guide their areas of focus for the week.
- Unknown Date: Italian naval vessels plan to begin working with the Libyan coast guard this week to prevent migrants from reaching Italian shores.
- Aug. 6-8: Russian Foreign Minister Sergei Lavrov will meet with his U.S. counterpart, Secretary of State Rex Tillerson, on the sidelines of the Association of Southeast Asian Nations (ASEAN) Regional Forum in the Philippines, amid heightening tensions over sanctions and counter-responses.
- Aug. 9-10: Russian Foreign Minister Sergei Lavrov will travel to Thailand to meet with his counterpart there, Don Pramudwinai, to discuss bilateral cooperation.
- Aug. 12: Russia's International Army Games will conclude, after starting July 29. The games also involve Azerbaijan, Belarus and Kazakhstan and were co-organized by China for the first time.
- Aug 12: The Noble Partner military exercises, which began Aug. 1, will conclude. The exercises involve Georgia and North Atlantic Treaty Organization members, including 1,600 troops from the United States.
- Aug. 5-8: The ASEAN Regional Forum will take place in Manila, featuring top diplomats from 27 countries including the United States, China, Russia, Japan and North Korea.
- Aug. 8: U.S. Secretary of State Rex Tillerson will visit Thailand after attending the ASEAN Regional Forum in the Philippines before proceeding to Malaysia.
- Aug. 9: Cambodian Prime Minister Hun Sen will conclude a trip to Japan after arriving Aug. 6.
- Aug. 9-10: Russian Foreign Minister Sergei Lavrov will travel to Indonesia and Thailand.
- Aug. 12: The two-week GUAMEX 2017 military anti-submarine exercises will conclude at Andersen Air Force Base in Guam.
- Aug. 8: Leader of Pakistan's Awami Tehreek opposition party Tahir-ul-Qadri will return from his exile in Canada to run against Chief Minister of Punjab Shahbaz Sharif in the competition to replace interim Prime Minister Shahid Khaqan Abbasi.
- Aug. 10: Indian Minister of External Affairs Sushma Swaraj will travel to Nepal for a two-day summit of the Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (BIMSTEC), comprising India, Myanmar, Bangladesh, Sri Lanka, Bhutan, Thailand and Nepal.
- Aug. 11: Indian Parliament's Monsoon Session will conclude.
- Aug. 12: Former Pakistani President Pervez Musharraf is expected to announce the date of his return, now that his political adversary Nawaz Sharif is no longer prime minister.
Middle East/North Africa
- Aug. 7-8: A joint committee of Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC representatives will convene in Abu Dhabi for talks regarding compliance with the agreement about reducing supplies.
- Aug. 7-8: Top military commanders from Turkey and Qatar will observe ongoing military drills.
- Aug. 8-9: Russia, Iran and Turkey will likely convene in Tehran for talks on Syria under the Astana format.
- Aug. 8: Senegal and Guinea's first ambassadors to Israel will present their credentials.
- Aug. 8: Stakeholders for the Central Bank of Argentina will meet.
- Aug. 8: Latin American ministers of foreign affairs will gather in Lima to discuss Venezuela's July 30 constituent assembly vote.
- Aug. 10: Bolivian and Chilean government officials will discuss border cooperation in La Paz.
- Aug. 10: Stakeholders for the Bank of Mexico will meet.
- Aug. 10: Stakeholders for the Central Reserve Bank of Peru will meet.
- Aug. 13: Argentina will hold primaries for its October legislative election.
- Aug. 8: Kenya will hold its presidential election.
- Aug. 8: South African President Jacob Zuma will face a vote of no confidence.